Centerbridge Activates $3 Billion for Opportunistic Credit Bets

(Bloomberg) -- Centerbridge Partners LP activated $3 billion of capital it raised from investors in 2016 in anticipation of a “robust credit cycle,” according to people with knowledge of the matter.

The firm last week activated the pool of capital, which it raised as part of a stapled offering linked to one of its flagship funds, Centerbridge Special Credit Partners III LP, said one of the people, who asked not to be identified because the matter is private. A Centerbridge Partners representative declined to comment.

The two vehicles have a mandate to focus on opportunistic investments in senior loans and high-yield bonds issued by middle-market and large companies in North America and Europe that are experiencing “some form of stress,” including liquidity and operating issues, according to a memo by Oregon Investment Council, an investor in the funds.

The memo describes the “reserve fund,” Centerbridge Special Credit Partners III-Flex LP, as being able to be activated at Centerbridge’s discretion at any point during the agreed-upon investment period “should a robust credit cycle materialize.” The firm wouldn’t charge management fees on that pool of capital until it’s activated, according to the memo.

Other investors in the two funds include North Carolina Retirement Systems, San Francisco Employees’ Retirement System and California State Teachers’ Retirement System, according to data compiled by Bloomberg.

Centerbridge, founded by Jeffrey Aronson and Mark Gallogly, has about $27 billion in assets under management across private equity, credit, distressed strategies, special situations and real estate, according to its website.

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